Green Chip Stocks

India Solar Power Development

Are India Solar Companies Skimping on Quality?

Indian states continue to award solar power projects to big developers like Welspun Energy, Moser Baer and others despite shoddy performance by big power developers.

Tata Power which is India’s biggest power utility in the private sector recently wrote a letter to numerous top officials recommending that the company be blacklisted from solar project bidding. The company accused the developer Moser Baer of bad engineering, shoddy quality and maintenance. The power levels guaranteed by the developer was not being met as the company did not rectify the problems even after a year of prodding by the utility.

Note the Indian solar power sector has been “shining” according to industry analysts but the ground realities are far different. Most projects are plagued by bad designing and engineering leading to power output which is far short of ideal.

Experienced developers in solar projects are few with most projects being won by new and small players. Note Moser Baer Photo Voltaic is one of the biggest companies winning numerous projects domestically and internationally. If the performance of the biggest developer is so bad, one shudders to think about other solar power plants built by smaller developers.

The Indian Wind Industry is notorious for bad performance as it was incentivized by accelerated depreciation which meant that most returns could be made during investment. However it is surprising that for solar power where the payments are linked to generation, the performance is bad.

Tata Power DDL, (formerly North Delhi Power Ltd, in which Tata Power owns 51 per cent) has said in a letter to the Ministry of New and Renewable Energy, that it had awarded three solar projects to Moser Baer Photo Voltaic Ltd, a unit of the Moser Baer group.

Not up to industry standards

“The performance of the solar plants installed by them has not been up to the industry standards,” the letter says.

The letter cites a number of failures, including failure to adhere to contractual timelines leading to “tremendous delay” in commissioning of the projects, poor engineering leading to “faulty design and frequent change in layouts”, quality of workmanship and high system losses leading to actual electricity generation being much less than the guaranteed generation.”

Poor response, maintenance support

But what has irked Tata Power DDL is the “poor response to client’s complaints for rectification of faults” and the “weak operations and maintenance support”.

The letter has been copied to as many as 87 people connected to the power industry, including the officials of the Ministry of Power, Ministry of New and Renewable Energy and the various state electricity regulatory commissions.

Welspun Group and Moser Baer India Ltd. (MBI) are among four companies that have signed agreements to build solar power projects in India’s central Madhya Pradesh state, an official said today.

Welspun and Alpha Infraprop Pvt. won by auction contracts to build 105 megawatts and 20 megawatts respectively, Rajesh Mehta, chief general manager of Madhya Pradesh Power Management Co., the state-run power trader that ran the bidding, said by telephone.

The contracts commit the companies to sell sun-based power to MP Power Management Co. for 25 years at a rate of 7,900 rupees ($140) a megawatt-hour for Alpha Infraprop and 8,050 rupees a megawatt-hour for Welspun.

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